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Chapter 2.
Employment, Hours, and Earnings from the Establishment
Survey
Concepts
Establishment
An establishment is an economic unit that produces goods
or services, such as a factory, mine, or store. It generally
is at a single location and is engaged predominantly in one
type of economic activity. Where a single location
encompasses two or more distinct activities, these are
treated as separate establishments, if separate payroll
records are available and certain other criteria are met.
Employment
Employment is the total number of persons employed full
or part time in nonfarm establishments during a specified
payroll period. Temporary employees are included. Data refer
to persons who worked during, or received pay for, any part
of the pay period that includes the 12th of the month, a
standard for all Federal agencies collecting employment data
from business establishments.
Workers on an establishment payroll who are on paid sick
leave (when pay is received directly from the employer);
who are on paid holiday or vacation; or who work during only
a part of the specified pay period, even though they are
unemployed or on strike during the rest of the pay period,
are all counted as employed. Persons on the payroll of more
than one establishment during the pay period are counted in
each establishment that reports them, whether the duplication
is due to turnover or dual jobholding. Persons are
considered employed if they receive pay for any part of the
specified pay period, but they are not considered employed
if they receive no pay at all for the pay period. Those
excluded from the employed include persons who are on layoff,
on leave without pay, or on strike for the entire pay period;
and persons who were hired but have not yet started work
during the pay period. The employment statistics for
government refer to civilian employees only. The CES
survey scope excludes the self-employed, unpaid family
workers, and workers in private households
and agriculture.
In addition to employment data for all employees,
the survey also collects data on a major category of workers
in each industry for estimation of hours and earnings.
CES collects data for production workers in manufacturing
and in natural resources and mining industries. In
manufacturing, the production worker group covers employees,
up through the level of working supervisors, who engage
directly in the manufacture of the establishment’s product.
Among those excluded from this category are persons in
executive and managerial positions and persons engaged in
activities such as accounting, sales, advertising, routine
office work, professional and technical functions, and
force-account construction. (Force-account construction is
construction work performed by an establishment, engaged
primarily in some business other than construction, for its
own account and for use by its employees.) Production
workers in natural resources and mining are defined in a
similar manner. A more detailed description of the classes
of employees included in the production and nonproduction
worker categories in manufacturing is shown on the sample
BLS 790 C data collection form included in the appendix to
this chapter.
In construction, the term construction workers covers
workers, up through the level of working supervisors, who
are engaged directly in a construction project, either at
the site or in shops or yards, at jobs ordinarily performed
by members of construction trades. Excluded from this
category are executive and managerial personnel, professional
and technical employees, and workers in routine
office jobs.
For private service-providing industries (trade,
transportation, utilities, information, financial activities,
professional and business services, education and health
services, leisure and hospitality, and other services), data
are collected for nonsupervisory workers. Nonsupervisory
workers include most employees, but exclude those in
executive, managerial, and supervisory positions. (See the
sample BLS 790 E data collection form included in the
appendix to this chapter.)
An employment benchmark is a complete count of employment
used to adjust estimates derived from a sample. Adjustment
is usually done annually. The basic source of benchmark
data for the CES survey is data on “all employees”
collected from employers by State Employment Security
Agencies as a byproduct of the unemployment insurance (UI)
system. About 97 percent of all employees on nonfarm
payrolls are covered by the UI system. The compilation and
use of benchmark data are explained in detail in later
sections of this chapter.
Hours and earnings
The hours and earnings series are based on reports of
gross payrolls and the corresponding paid hours for
production workers, construction workers, or
nonsupervisory workers. (See the sample BLS 790 C data
collection form included in the appendix to
this chapter.)
Aggregate payrolls include pay before deductions for
Social Security, unemployment insurance, group insurance,
withholding tax, salary reduction plans, bonds, and union
dues. The payroll figures also include overtime pay, shift
premiums, and payments for holidays, vacations, sick leave,
and other leave made directly by the employer to employees
for the pay period reported. Payrolls exclude bonuses,
commissions, and other lump-sum payments (unless earned and
paid regularly each pay period or month), or other pay not
earned in the pay period (such as retroactive pay). Tips
and the value of free rent, fuel, meals, or other payments
in kind are not included.
Total hours during the pay period include all hours
worked (including overtime hours), hours paid for standby
or reporting time, and equivalent hours for which employees
received pay directly from the employer for sick leave,
holidays, vacations, and other leave. Overtime and other
premium pay hours are not converted to straight-time
equivalent hours. The concept of total hours differs from
those of scheduled hours and hours worked. The average weekly
hours derived from paid total hours reflect the effects of
such factors as unpaid absenteeism, labor turnover,
part-time work, and strikes, as well as fluctuations in
work schedules.
Overtime hours are hours worked for which premiums were
paid because they were in excess of the number of hours of
either the straight-time workday or workweek. Saturday and
Sunday hours (or 6- and 7th-day hours) are included as
overtime only if overtime premiums were paid. Holiday hours
worked as overtime are not included unless they are paid for
at more than the straight-time rate. Hours for which only
shift differential, hazard, incentive, or similar types of
premiums were paid are excluded from overtime hours. Overtime
hours data are collected only from establishments in
manufacturing industries.
Average hourly earnings series, derived by dividing
gross payrolls by total hours, reflect the actual earnings
of workers, including premium pay. They differ from wage
rates, which are the amounts stipulated for a given unit
of work or time. Average hourly earnings do not represent
total labor costs per hour for the employer, because they
exclude retroactive payments and irregular bonuses, employee
benefits, and the employer’s share of payroll taxes.
Earnings for those employees not included in the production
worker or nonsupervisory categories are not reflected in the
estimates.
Real earnings data (those expressed in 1982 dollars)
result from the adjustment of average hourly and weekly
earnings by means of the BLS Consumer Price Index for Urban
Wage Earners and Clerical Workers (CPI-W); they indicate the
purchasing power of money earnings after adjustment for
changes over time in the prices of consumer goods
and services. These data cannot be used to measure changes
in living standards as a whole, which are affected by other
factors such as total family income, the extension and
incidence of various social services and benefits, and the
duration and extent of employment and unemployment. The
long-term trends of these earnings data also are affected
by changing mixes of full-time and part-time workers,
high-paid and low-paid workers, and so on.
Straight-time average hourly earnings are approximated
by adjusting average hourly earnings to eliminate only
premium pay for overtime at a rate of time and one-half.
Thus, no adjustment is made for other premium payment
provisions such as those for holiday work, late shift work,
and premium overtime rates other than those at time and
one-half. Straight-time average hourly earnings are
calculated only for manufacturing industries.
Industrial classification
Industries are classified in accordance with the
2002 North American Industry Classification System (NAICS).
Industrial classification refers to the grouping of reporting
establishments into industries based on their major product
or activity. Using a description provided by the employer
on a questionnaire, State Employment Security Agencies
assign an industrial code to each establishment as an
administrative byproduct of the UI reporting system.
All data for an establishment making more than one product
or engaging in more than one activity are classified under
the industry of the primary product or activity, based on
the information reported.
Next: Data
Sources and Collection Methods
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Bureau of Labor Statistics
